And finally, there’s this emerging trip that’s immediate access. It used to be more of a convenient store driven trip but with the growth in dollar and drug channels and some of the hard discounters. This trip is one of the fastest growing trip sizes and the Wal-Mart express store has sort of uniquely found a way to participate in that and we can be larger in this segment and we’re planning on doing that.
The strategic objective is obviously to fill in the void between supercenters using the now-familiar neighborhood store and the up-and-coming express formats. Wal-Mart Stores, Inc. (NYSE:WMT) already has more than 300 of the former in operation, and it’s just now beginning to delve into the latter (of which there are only 20) with earnestness.
As Simon noted in his presentation, “the customer response [to the express format] has been very, very good,” delivering double-digit comps in the first half of the current fiscal year.
What should we take away from this?
In the first case, if Wal-Mart Stores, Inc. (NYSE:WMT) does indeed proceed with its plan to capture every last drop of commerce that settled in the gaps between its superstores, then it’s probably smart to start saying your goodbyes to the likes of Dollar General and Family Dollar. Up against a behemoth like Wal-Mart, they aren’t long for this world.
The better news, on the other hand, is for investors in Wal-Mart’s stock who have worried where additional growth will come from. Suffice it to say, this appears to be the company’s answer.
If you think Wal-Mart Stores, Inc. (NYSE:WMT) is done stretching its tentacles throughout every city and town in America, then I have bad news for you: It’s just getting started.
For much of the last few decades, the world’s largest retailer focused on building out its now-omnipresent supercenters. The strategy was to cater to the so-called “stock-up” trip, the weekly or monthly visit in which customers purchased a large quantity of food, housing supplies, and general merchandise.
At last count, Wal-Mart Stores, Inc. (NYSE:WMT)’s portfolio of supercenters exceeded 3,200 units, or 80% of its fleet of locations. The problem with such large stores, however, is that they can’t be placed in near proximity to each other without cannibalizing sales. This left a vacuum that was soon filled by competitors like Dollar General Corp. (NYSE:DG) and Family Dollar Stores, Inc. (NYSE:FDO).
What to do? Should Wal-Mart just lay down and die? Or will it be able to get over the indignity of having a handful of deep-discount retailers feed on the scraps it absentmindedly left behind? Suffice it to say, neither of these options seem likely.
At a recent industry conference, Bill Simon, CEO of Wal-Mart Stores, Inc. (NYSE:WMT)’s U.S. operations, laid bare (link opens PDF) the retailer’s strategy for mopping up the slop, differentiating between three different types of Wal-Mart locations.
[O]ver 20 years ago, we . . . created the stock-up trip and we continue to deliver well against that. It’s the largest of the trips. It’s fundamentally served by supercenters and [Sam's Club].
Now increasingly, we’re using our smaller stores to provide a convenient access to customer so the customers can access our assortment and our everyday low prices much closer to where they live. And the neighborhood store is well-positioned for that basic food trip, the traditional grocery trip,
Mark Perry has a nice little point here. If we listen to some of the activists on the WalMart issue then we’re told that the jobs at the store are just terrible. The pay, the conditions are appalling: which leaves us with the mysterious question of why so many people seem to want a job at WalMart:
There’s a lot of rhetoric, especially from the left, that is very dismissive of working at Walmart. Go the Wikipedia entry for “Criticism of Walmart” and you’ll find references to the following criticisms of being a Walmart employee: low wages, poor working conditions, being forced to work off the clock, being denied overtime pay, not being allowed to take breaks, violations of child labor laws, instances of minors working too late, during school hours, or for too many hours in a day, labor racketeering crimes, sexual discrimination, limiting or eliminating health care benefits, poorly-run and understaffed stores, etc. You get the idea – it must be a pretty terrible place to work, right? But then why do so many people actually want to work for the retail giant, based on the huge number of applications that Walmart receives every time it opens a new store?
Perry then goes on to point out that the new Washington DC stores received 23,000 applications for only 600 positions. That’s a multiple of the number of applications there are for each and every place at Harvard. So, if the jobs are so terrible then why is it that so many people want to have one of these terrible jobs?
The answer is of course that the WalMart jobs are better than the alternatives. Those alternatives could be not having a job at all, working in fast food say, or at Target TGT +1.2% or wherever. The one thing we do know is that those WalMart jobs are better than one or all of those alternatives. This is revealed preferences in action: that people apply for the jobs means that they want them.
For Walmart, the pay, opportunities, and perks it offers must serve its goals for long-term growth and profitability. It offers training and development because it judges this to be good business. Such programs reward talent, motivate employees and recruit managers with extensive firsthand knowledge of store operations. With regards to wages, the company pays what it needs to in order to recruit an enormous number of competent and content associates. And it recognizes that it does not make business sense to pay more than it needs to.
This is what many Walmart critics detest: the company will not offer higher wages and benefits when it calculates that it will not be good business. According to these critics, every Walmart employee should be paid at least $12-$15 per hour, regardless of the role he fills, regardless of whether he has the skills or experience to justify such a wage, regardless of whether he is a model employee or a slouch, regardless of how many other individuals are willing and able to do his job for less, regardless of whether raising wages will be good for the company’s bottom line. In effect, their premise is that $12+ per hour wages shouldn’t have to be earned or justified; they should be dispensed like handouts.
Walmart’s relationship with its employees is win-win. Every wage that it pays is one that the employee accepts and a large number of individuals have successfully worked their way up the retail giant. So, let’s stop attacking Walmart for paying market wages.
Observe any hiring center for a new Walmart and you will see thousands of individuals eager to become a Walmart associate. Many already have jobs at fast food restaurants, supermarkets, or other retail stores. LaShawn Ross, 29, worked for McDonald’s and Winn-Dixie before taking a job at a brand new Walmart in Pinellas Park, Florida. Ross aptly summarizes the sentiments of many applicants: “They are huge, so I know there is a huge amount of opportunity.”
Well, nobody has to work at Walmart if he feels underpaid or underappreciated. He can always seek another job. So why do 1.4 million Americans choose to work at Walmart, many for well under $12 per hour?
Many entry-level Walmart jobs consist of comparatively safe and non-strenuous work such as stocking shelves, working cash registers, and changing price labels. Walmart also pays competitive wages, which, for these jobs, are generally under $12 per hour, because these positions require little or no work experience or technical skills. For anyone with modest credentials, these jobs provide good work experience—experience which they can use to eventually land a higher paying job.
Listen to the critics, though, and you’ll hear Walmart portrayed as if it is holding its employees down. But in fact the company offers incredible opportunities for any hard-working, ambitious person who wants to work his way up in retail. Three out of four Walmart store managers started out as hourly associates, and those managers can earn up to $170,000 per year. Some former hourly associates, such as Patricia Curran, have worked their way up to top executive positions. Curran was named by Fortune magazine as one of the 50 most powerful women of 2006. Walmart even encourages associates to complete training courses during fully paid work time and offers raises to associates who complete these courses.
Little wonder that when Walmart opens a new store, it’s not uncommon for as many as 10,000 people to apply for just 300 jobs.
Target is scaling back its holiday hiring.
The discount store chain said Friday that it plans to hire about 70,000 temporary workers this year, down from 88,000 a year ago.
Wal-Mart Stores to expand jobs for 70K workers
Wal-Mart Stores will hire 55K holiday staff, elevate 70K others to part- or full-time jobs
NEW YORK (AP) -- Wal-Mart Stores is hiring 55,000 seasonal workers and is elevating 70,000 more to part- or full-time positions as the holiday season ramps up.
The world's largest retailer said Monday that 35,000 temporary workers will become part-time and 35,000 part-time workers will gain full-time jobs.
Last season, Wal-Mart hired 50,000 workers and said it would offer more hours in general to its existing employees.
And as a "Job Killer" it appears the unemployed won as well. Win-Win for everyone.
Called it a "Job Killer".
Washington D.C. Mayor Vincent Gray today vetoed a bill that would require the largest retailers in the city to pay a $12.50 per hour minimum wage, saying it was a “job-killer” that would affect not only Walmart (its target) but also Home Depot HD +0.48%, Target TGT -1.38%, Wegman’s, Loew’s, Harris Teeter, AutoZone AZO -0.9% and Macy’s. Those retailers, he said in his veto letter, “either will not come or will not expand in the district” and will instead open stores just outside the district in Maryland, depriving low-income DC neighborhoods of both amenities and retail jobs.